09/30/2010 3:00PM

Union says it has agreement with New York OTB

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The bankrupt New York City Off Track Betting Corporation has reached a tentative deal with its union that would result in the loss of 550 jobs at the company and the transfer of OTB’s account-wagering operations to state racetrack operators, including the New York Racing Association, according to the union.

The union’s members are scheduled to vote on the plan on Oct. 6. Full-time employees are being offered $12,000 in severance if they agreed to be laid off, according to a report of the plan on the union’s website. The OTB company currently has about 1,300 union employees.

Also under the plan, New York City OTB’s telephone and Internet wagering operation would be transferred to the company’s racetrack creditors to satisfy a $100 million debt, according to the report. In addition, tracks would accept a $30 million annual reduction in the amount of money provided by bets through OTB, through proposed statutory changes to the distribution formula for the fees, the union said.

Officials for NYRA said on Thursday that they were not aware of the plan’s details, including the transfer of the account-wagering operation. The transfer has, however, been offered up in the past by OTB’s president, Greg Rayburn, as a way to eliminate the debt to the racetracks.

Any deal with the union would still need to be approved by the OTB’s creditors’ committee, and, ultimately, the bankruptcy court. The creditors’ committee includes Yonkers and the New York Racing Association, which are together owed nearly half of the OTB company’s debt.

“We haven’t seen the plan, and we don’t know what’s in the agreement, and we don’t what it entails, so it’s unclear” whether the account-wagering operation is being transferred, said Patrick Kehoe, NYRA’s general counsel, who noted that the creditors’ committee would be made privy to the agreement if the union approves the deal. “We have to know where they stand before we figure out the rest” of the reorganization.

Although union officials did not return phone calls on Thursday, the tentative agreement probably cites the transfer because a significant number of jobs will be lost when the transfer takes place. According to the union’s report on the plan, employees who work for the account-wagering operation will be allowed to apply for positions in the OTB company’s remaining parlors.

Union officials agreed to the plan on Sept. 13 after Rayburn threatened to ask the bankruptcy court to void the company’s collective bargaining agreements, according to the union. Rayburn has said that OTB could not reorganize successfully unless the union accepted stark payroll reductions.

The transfer of the account-wagering operation would eliminate a significant competitor for the New York Racing Association and the other tracks and OTBs that operate their ownInternet and telephone wagering platforms.

Rayburn, a reorganization specialist, was brought in this summer to head OTB, and his proposals have been generally well received by the Thoroughbred racing industry, in part because of the possibility that NYRA will take over the account-wagering business. Account-wagering is the only growing segment of the market for parimutuel handle, which has suffered steep declines over the past two years after a prolonged period of stagnation.